The Pensions Regulator (TPR) and auditors have been accused by MPs of being “spectators” ahead of the collapse of Carillion.
Officials from TPR were asked at the joint inquiry by the Work and Pensions and Business Committees on Thursday why they did not use more of their powers to make Carillion executives address the contractor’s growing pensions deficit.
The regulator began an investigation into Carillion on 18 January, three days after the group was placed in compulsory liquidation with an estimated £900m funding shortfall in its pension scheme.
Lesley Titcomb, chief executive of the regulator, and Mike Birch, director of case management, told the hearing that Carillion had been threatened with action and had agreed to pay an extra £85m into pensions.
But Frank Field, who chairs the Work and Pensions Committee, said the money would be paid over 15 years, with nothing paid in the first two years.
At a previous hearing in January, Mr Field had said Carillion tried to “wriggle out” of pensions obligations while “paying out tens of millions in shareholder dividends and pay for bosses”.
MPs asked the officials how many pension schemes had been given as long as Carillion to put recovery plans in place.
They were unable to answer that question.
Mr Field asked why the regulator had not used its powers to get more money into the pensions.
Ms Titcomb said threatening action was often enough to ensure a company took action, but she acknowledged that “difficult judgements” were made.
When Ms Titcomb was asked which powers the regulator had used recently, she replied: “Over the past two years, we’ve made extensive use of a number of our powers for the first time”.
The regulator deals with 6,000 schemes, engaging with around 200 every year, she said.
Later, the MPs questioned Carillion’s auditors on how many clues there had been that the company was set to collapse.
KPMG’s head of audit Michelle Hinchliffe told MPs: “We check the figures and make sure they are in accordance with accounting standards but it’s not a guarantee that the company will continue or that the management are making effective decisions.”
Earlier in the session, Michael Jones, Deloitte’s internal audit partner had made a similar point, saying: “We’re not management, we don’t take strategic decisions.
“In fact the (Chartered) Institute of Internal Auditors prohibits us from doing that and being part of management.”
Rachel Reeves MP, who chairs the Business Committee, added: “On this morning’s evidence from KPMG and Deloitte, these audits appear to be a colossal waste of time and money, fit only to provide false assurance to investors, workers and the public.”